19960909
AD SPENDING PROJECTED TO RISE; WILL PR SPENDING FOLLOW?
September 9, 1996
U.S. corporations are projected to increase their advertising spending modestly over the next four years, according to a study by media industry investment banking firm Veronis, Suhler & Associates Inc. (VS&A), New York.
Advertising expenditures will rise at a compound annual rate of nearly 7 percent, going from $103 billion last year to $144.7 billion in 2000, according to the VS&A study.
The study does not look at public relations spending. But since many times PR dollars come from the same budget, the findings suggest that corporations will be able to fund at least small increases in their programs.
For PR agencies, it adds reason for optimism that billings--now at record levels--will continue to grow at healthy rates.
For example, Richard Edelman, president and CEO of Edelman Public Relations Worldwide, New York, said his firm--on track to pass $100 million in billings this year--will grow "in excess of 10 percent for the foreseeable future." He attributes this to the overall strength of the economy in most of the world. Edelman also believes that public relations is continuing to gain a larger share of the dollars spent on marketing, and he sees increased corporate spending on public affairs and corporate communication/investor relations programs.
According to the VS&A study, "Communications Industry Forecast," one factor fueling increased advertising spending is a renewed focus on brand promotion. In recent years, promotion of consumer product brands sagged as companies poured more dollars into discounting and couponing programs to get an immediate boost in sales. "With restructuring virtually completed, companies have now refocused their attention on expanding their market share and establishing brand identity in an increasingly competitive environment," said John Suhler, president of VS&A.
More Placement Opportunities?
The strength of electronic and print media advertising also should lead to strong media placement opportunities for public relations professionals.
Veronis, Suhler projects newspaper advertising to increase annually by 5.5 percent between now and the year 2000. Magazine advertising will grow even faster--about 7.2 percent annually, according to VS&A.
In the print media, increased advertising generally increases the size of publications, leading to more or longer articles--with correspondingly more chances for PR pros to get mentions or contribute entire articles.
VS&A projects a 6.1 percent compound annual growth rate in spending for television advertising, and a 7 percent annual growth rate for radio advertising spending.
While ad spending in the broadcast media does not lead to an expansion of the editorial hole, (because broadcasting time is fixed), the ongoing expansion of cable TV and satellite TV programming and channels does create new placement opportunities.
Editor's note: To order a copy of the Veronis, Suhler report for $995, call Chris Russell at 212/935-4990. (Veronis, 212/935-4990; Edelman, 212/768-0550)
Advertising Spending (in billions)
| Venue | 1995 | 2000 |
| Broadcast TV | $30.6 | $41.2 |
| Cable/satellite TV | $5.3 | $9.9 |
| Radio | $11.3 | $15.9 |
| Daily newspaper | $36 | $47.4 |
| Consumer magazines | $8.7 | $12.5 |
| Trade magazines | $5.9 | $8.3 |
Source: Veronis, Suhler & Associates Inc.